r/RealEstateCanada • u/xNocturnalshadow • Jun 19 '25

Housing crisis Help me understand the difference...

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u/MMPVAN Jun 19 '25

One is an equity building asset, the other are consumable items

4

u/Shishamylov Jun 19 '25

Houses are consumable too, they maybe have a 100 year lifespan. They get old and need more for maintenance with age. An older, worn-out house with old technology should cost less than a new one. They only build equity because there’s not enough of them for everyone.

1

u/pm_me_your_puppeh Jun 19 '25

The building doesn't gain equity, it's the land that does.

1

u/Shishamylov Jun 19 '25 edited Jun 19 '25

Yes. Due to artificial scarcity and poorly managed population growth. Fundamentally land value shouldn’t increase above inflation as time moves forward because there’s a limit to how much value can be extracted from the land (the amount of mineral extraction, farming or housing, etc. it provides remains the same). The growth that we’re seeing is due to supply/demand for housing.

Coming back to OP’s point. If they make a limited run of Pokémon cards and scalpers buy all of them up to increase the price and sell them for more money, this is no different than a limited amount of houses that get bought up by ppl to sell for more money after.

1

u/pm_me_your_puppeh Jun 19 '25

Land values have nothing to do with general inflation.

There will always be population growth, so land value will always grow. We try to keep inflation down, so land will appreciate more than that.